The South Korean government has been criticized for not doing enough to help prevent hacking at cryptocurrency exchanges. Data obtained by the regulators show that three crypto exchanges were hacked, with damage of almost $1 billion, after having gone through an inspection by the government. Meanwhile, one of the nation’s largest crypto exchanges, Upbit, has denied the rumor that it was also hacked.

Crypto Hacking Incidents

The South Korean Ministry of Science and Technology, the Ministry of Information and Communication, the Korea Communications Commission (KCC), and the National Police Agency have submitted data on hacking incidents of cryptocurrency exchanges to the National Assembly, local media reported on Monday.

Min Kyung-wook.

Min Kyung-wook, a member of the National Assembly’s Science and Technology Information and Communications Commission, revealed that the data shows seven hacking incidents. They resulted in the loss of 128.8 billion won (~US$115 million) in cryptocurrencies, the Korea Daily reported.

The government has conducted a security check on 31 crypto exchanges, the news outlet detailed, adding that 10 of them were inspected between September and December last year while the other 21 from January to March this year.

The regulators advised the exchanges to take immediate action to improve a number of areas such as the “lack of information security system such as firewall, lack of system access control, [and] insufficient malicious code prevention.”

Government Criticized

Out of the total damage of 128.8 billion won, 110 billion won (~$98.5 million) in cryptocurrencies were stolen from three crypto exchanges. These three “were hacked even after receiving government security checks,” the publication noted. “The government has been criticized for not being able to take effective measures against the exchange security problem.”

The first of the three is Youbit. The platform was inspected by the government on October 26 and 27 last year but was subsequently hacked less than two months later, on December 19. The security breach resulted in the loss of about 25.9 billion won (~$23.2 million).

Coinrail was inspected on February 8 and 9 and was hacked on June 10, with damage of about 53 billion won (~$47.5 million), the publication quoted the government’s findings.

One of the country’s largest crypto exchanges, Bithumb, was inspected twice by the government, on November 29 and 30 last year and again on February 22 and 23, the news outlet detailed. However, on June 19, it suffered a security breach and lost about 35 billion won (~$31.4 million). The exchange, however, lowered its loss estimate to about 19 billion won (~$17 million) days later.

Lawmaker Min criticized the government, pointing out:

The hacking incidents occurred even at the places where the government directly conducted security checks.

Citing that “the government has not yet made clear rules for cryptocurrencies,” Professor Lim Jong-in of Korea University’s Information Security Graduate School asserted that “as Bithumb and other exchanges act as financial institutions in reality, the government should set up a regulatory system based on this.” He believes that if the regulators let them remain as they are, “the damage will be exponential.”

Upbit Denies Hack Rumor

With news of multiple security breaches at various crypto exchanges, all eyes are one of the nation’s leading crypto exchanges by volume, Upbit. There have been various rumors that the Kakao-backed exchange has been hacked even though Upbit has consistently denied them.

On July 8, the exchange issued a statement in response to one particular rumor which it said had surfaced “in many communities” on Sunday. Citing that the rumor is false, the exchange wrote:

Your assets held at Upbit are kept secure…The large amount of coins movement found through communities is part of [us] upgrading the wallet management system, and the work is done under the tightly managed security environment of Upbit…We hope that your investment will not be harmed due to false rumors.

Do you think the Korean government could do more to prevent the hacks? Let us know in the comments section below.